NCLT in Bengaluru refuses to stop Byju’s EGM on March 29, discussing increased authorized share capital post USD 200M rights issue. Investors file lawsuit aiming to remove founders, CEO Byju Raveendran, and bring in new board, revealing internal divide in top Indian edtech firm. (March 28, 2024)
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BENGALURU: Today(on 28th March), The National Company Law Tribunal (NCLT) in Bengaluru refused to stop Think and Learn Pvt Ltd, owner of Byju’s, from holding its extraordinary general meeting (EGM) on March 29. The meeting is set to discuss increasing the authorized share capital after a USD 200 million rights issue, indicating the company’s ongoing financial restructuring.
These four investors of Byju’s have challenged the company’s management by filing a lawsuit accusing them of oppression and mismanagement. Their aim is to remove not just the founders, including CEO Byju Raveendran, but also to bring in a new board of directors. This reveals a growing divide within the company and highlights the difficulties faced by one of India’s top edtech firms.
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Furthermore, the Karnataka High Court has scheduled a hearing on the investor group’s request to oust Raveendran for a date two months from now. This postponement adds an extended period of uncertainty, impacting the company’s ability to make immediate operational decisions.
The investors’ concerns go beyond just wanting management changes. They’ve also questioned the validity of the recently completed rights issue, aiming to cancel it. This effort is backed by a prominent group of shareholders, including big names like Prosus, General Atlantic, Sofina, and Peak XV, as well as Tiger and Owl Ventures. This joint effort shows a strong resistance against the current leadership, indicating wider worries about governance and the company’s strategic path.
On February 27, the National Company Law Tribunal (NCLT) mandated the segregation of proceeds from the rights issue into a dedicated escrow account. This measure is aimed at safeguarding the funds pending the resolution of the ongoing dispute.
The disagreement among Byju’s investors, especially those led by Prosus, who together own 32 percent of the company, has reached on this point. They held an Extraordinary General Meeting (EGM) on February 23, where they claim that over 60 percent of participants supported their proposed changes.
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These changes included removing CEO Byju Raveendran and restructuring the board. This shows a strong desire for a change in strategy and governance within the company.
